Analysis
BEIJING – With per capita disposable income growing steadily over the years, the central government has pledged in its development plans to increase urban and rural residents’ property income through multiple channels.
Property income has been included in the Outline of the 14th Five-Year Plan (2021-2025) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035. It refers to earnings from bank deposits, securities, and other personal or family properties.
The 17th National Congress of the Communist Party of China (CPC) in 2007, for the first time, stressed efforts to create conditions to enable more citizens to have property income. It has since played an ever-more important role in people’s disposable income.
Data from the National Bureau of Statistics (NBS) showed that the mainland’s net property income per capita reached 2,619 yuan in 2019, up from 1,423 yuan in 2013. The proportion of net property income in disposable income also rose from 7.7 percent to 8.5 percent in the period.
Given the increasing income amid the economy’s growing momentum, investment and wealth management are gaining popularity among mainlanders as the proportion of people purchasing related products continues to grow.
A report from China International Capital Corporation Limited, an investment bank, projected that mainlanders, through decades of wealth accumulation, have entered a stage where they accelerate the allocation of financial assets. Under the circumstances, the central government is seeking more approaches for its people to increase their income through such money management.
MORE CHOICES
As a significant property income source, the financial market will likely play a bigger role in the country’s plan to increase its people’s earnings.
In the outline, the central government announced that it would create “more financial products that suit the demand for family wealth management.”
“China has abundant wealth-management products, but some demands remain unsatisfied if we examine the structure of these products,” said Zeng Gang, deputy director of the National Institution for Finance and Development. He stressed the diversity of wealth-management demands.
Considering the country’s aging population, demand for wealth-management products related to elderly care is becoming more robust, Zeng said, adding that such products will be a priority in future development.
The country has meanwhile made continued efforts to toughen financial market guidance and regulations. It benefits the developers of financial products with fairer market rules, more transparent information disclosure, and a stricter crackdown on illicit behavior.
A case in point is the central government’s decision at last December’s tone-setting Central Economic Work Conference that financial innovation must happen under prudent supervision to prevent disorderly capital expansion.
A prosperous and healthy financial market will create a fairer environment. Financial institutions, such as banks’ money management subsidiaries and operators of public offering funds, can thus improve themselves to meet different wealth-management demands and provide better services for investors, Zeng said.
PROFIT-SHARING IMPROVEMENTS
By the end of February, the number of investors in the mainland’s securities market reached around 181.48 million.
Considering such a large group, listed firms’ dividend systems have become a focus of the policy-making process for increasing property income.
Before the newly-released outline, which urges improvements on the dividend system for listed companies, the country has made milestone progress in recent years to increase the number of listed firms’ dividends. It is the result of tightened regulations and listed firms’ growing awareness of giving investors more yields.
Last year, the mainland’s listed firms issued cash dividends of 1.4 trillion yuan, up from 1.36 trillion yuan in 2019. Their aggregate cash dividends topped 10 trillion yuan.
Chen Shaoxia, general manager of a Jiangsu-based investment company, said the growing amount of dividends in the A-share market reflects the progress of the country’s capital market reform on the registration and delisting system.
To further optimize the profit-sharing system, persistent efforts should go into improving the quality of listed companies and advancing reforms to ensure investors in the securities market have a stronger sense of gain, Chen added. – Xinhua
